Is Portugal close to form anti-austerity coalition government?
by Dimitris Rapidis and Miguel Coelho (October 14, 2015)
Portugal is close to form a leftist government led by the Socialist Party with the participation of Bloco de Esquerda, and the Communist Party. This could be the first step in the long way towards balancing dire consequences of austerity politics and invest in an pro-social agenda. The new government has as many opportunities and burdens as it could ask for.
The hardliner in the ongoing talks is the Communist Party. Bloco de Esquerda will be delighted to participate in the government, but wants to be firm with regards to the debt issue and the fiscal policy. Both topics are also in the agenda of the Socialist Party as there is growing pressure from big parts of the society towards debt restructuring and less fiscal discipline.
Socialist Party (PS) leader Costa is playing a crucial role in deciding the formation of the government. Talks with Coelho from the centre-right Forward Portugal Party could bring in surface the grand coalition. This is not the case, as Costa doubts on the "success story" of Coelho. Still, the program of the parties might differ, but both want Portugal in Eurozone and have no intention to start squeezing Brussels.
Talks with the Communist Party (CP) and Bloco de Esquerda (BE) can be more beneficial for Costa as in that scenario his party will be the one to largely define decision-making. Undoubtedly, CP and BE will press for less austerity, but without challenging Portugal's position in the monetary area. Even if both parties have second thoughts on Eurozone and EU membership, chances for rupture are extremely low.
Debt Restructure, Fiscal Discipline, Emigration
Many are the chances for the formation of a leftist government. Given the mobilization of the S&D Group in the European Parliament with regards to the monitoring of the Greek bailout and the change of leadership in Die Linke (GUE/NGL), expected to give some fresh air, the momentum is on the side of both PS and BE.
Debt restructure is the first thing. Given Portugal's consistency in implementing austerity politics, Brussels could be more open to such a discussion. In this respect, the Greek case can also push further the talks in case there is a coordinated effort by more than one Eurozone governments. In this scenario, Greece and Portugal should wait and see what will be the result in Spanish elections to see whether a bigger front can be formed.
Fiscal discipline is another field, a painful one for a large part of the Portuguese society. With poverty and unemployment rates depicting a cloudy image, further consolidation will fail. Emigration of skilled workforce and young graduates is one of the major repercussions of austerity, with more than 134,000 Portuguese having sought jobs abroad since 2011. Portugal, along with Greece, are the two Eurozone member-states with the highest emigration rate. Brain drain continuous and deprives domestic economy from fresh and innovative minds.
Again, the stakes remain high for domestic politics. The new government should be formed on a common, solid programmatic agenda to avoid internal clash. A second round of elections would be catastrophic and would certainly increase political fragmentation.
Dimitris Rapidis is Director at Bridging Europe. Miguel Coelho is Junior Policy Analyst at Bridging Europe
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